Barnes sees yield-plus in US housing

Commonwealth Bank of Australia’s former head of property, institutional banking, Peter Barnes, and a US partner, aim to raise $70 million to invest in US apartment complexes.

The pair are close to finalising a cornerstone investor and will decide by the end of the year whether to proceed as a new real estate investment trust IPO or as an unlisted fund.

US housing has attracted a plethora of Australian investors but the new proposal, Domus, is different.

“This is not a distressed play," said the other partner in Domus, the founder of Geringer Capital, Robert Geringer.

Instead it will focus on yield, using cheap funding to deliver a cash return to Australian investors of around 9.2 per cent.

Mr Barnes said that capital gain would be “a bonus".

The US apartment sector, known as multi-family real estate, is an established US investment class.

It took a hit with GFC, as values fell around 40 per cent, but the sector has rebounded as demand for rentals has risen with the housing collapse, as interest rates have fallen and as new supply has collapsed.